George Osborne’s vow over the weekend that Wednesday’s Budget will “back people who want to start their own business” has raised the prospect of changes afoot for would-be freelancers wishing to ‘go it alone.’
Speaking to BBC1’s Andrew Marr Show on Sunday, the chancellor said his Red Book on March 20 would “back people who want to work hard and get on,” including those who aspire to go into business for themselves.
Tim Gregory, partner at chartered accountants Saffery Champness offered: “If this government is really serious about creating a start-up economy, it should give some time to further reconsidering income tax loss relief restrictions for businesses.“Not doing this just prolongs an unnecessary disincentive for people to start new businesses and dampens the entrepreneurial spirit we seem to be missing.”
Before the chancellor’s televised interview, the expectation for freelance company owners was that he may be planning to marry the small companies’ rate with the headline rate of corporation tax.
"It is possible that the chancellor will look at accelerating the reduction in the main rate of corporation tax to 20% to unify the rates for larger and smaller organisations," reflected Lisa Macpherson, national director of tax at business advisory PKF.
However the Institute of Directors believes that a single rate of tax for all enterprises – regardless of their size – will not be announced on Wednesday, according to Richard Baron, the IoD’s head of tax.
He told FreelanceUK: “I do not expect anything on aligning the SCR with the main rate of corporation tax. They will be very nearly the same anyway by 2014.
“There would be a high political cost to putting up the SCR to align, and a fairly high short-term Exchequer cost of bringing the main rate down, although in the long term it would be better for the economy and for the Exchequer to keep cutting the main rate.”
Meanwhile, despite Mr Osborne’s promise to
assist would-be business owners, accountancy firm Kingston Smith worries that
those eying self-employment, where the rates of National Insurance levied are
lower than for people in employment, may be penalised.